Campbell Inc. is a small manufacturer that uses machine-hours as its activity ba

Question

Campbell Inc. is a small manufacturer that uses machine-hours as its activity base for assigning overhead costs to jobs. The company estimated the following amounts for 2013 for the company and for Job 62: Company Job 62 Direct materials $60,000 $4,500 Direct labor $25,000 $2,500 Manufacturing overhead costs $72,000 Machine hours 80,000 1,350 During 2013, the actual machine-hours totaled 84,000, and actual overhead costs were $71,000. Instructions: (18 points) (a) Compute the predetermined overhead rate. (b) Compute the total manufacturing costs for Job 62. (c) How much overhead is over or under applied for the year for the company? State the dollar amount and whether it is over- or under applied. (d) If Campbell Inc. sells Job 62 for $14,000, compute the gross profit.

Explanation / Answer

Company Job 62 DM 60000 4500 DL 25000 2500 MOH 72000 Machine Hr 80000 1350 Actual Machine Hr 84000 1417.5 Actual over head 71000 a)POHR 0.9 72000/80000 b)Estimated Manufacturing Cost for Job 62 = 8215 Actual OHR 0.845238 71000/84000 Actual Manufacturing Cot Job 62 = 8198.125 c) Overhead is overapplied d) Profit=14000-8198 = 5802

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